Contractionary- Contractionary monetary policy is a form of economic policy used to fight inflation which involves decreasing the money supply in order to increase the cost of borrowing which in turn decreases GDP and dampens inflation

Expansionary - when a central bank uses its tools to stimulate the economy.

Fiat Money - Currency with nothing else backing it up, except for the fact that its legal tender

Gold Standard - the system by which the value of a currency was defined in terms of gold, for which the currency could be exchanged. The gold standard was generally abandoned in the Depression of the 1930s.

Functions of money

Unit of exchange - When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions.

Unit of account - The value of something is measured in a specific currency. This allows different things to compared against each other; for example, goods, services, assets, liabilities, labor, income, expenses. It lends meaning to profits, losses, liability, or assets.

Store of value - the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. More generally, a store of value is anything that retains purchasing power into the future

Fractional reserve banking & the money supply - the common practice by commercial banks of accepting deposits, and making loans or investments, while holding reserves at least equal to a fraction of the bank's deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank.

Federal reserve - is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.

How its organized - is made up of twelve members including all seven members of the Board of Governors, the New York Fed President, and four Reserve Bank presidents, who serve on a rotating basis.

Reserve requirement - The Federal Reserve requires banks and other depository institutions to hold a minimum level of reserves against their liabilities. Currently, the marginal reserve requirement equals 10 percent of a bank's demand and checking deposits.

Discount rate - The Federal Reserve requires banks and other depository institutions to hold a minimum level of reserves against their liabilities. Currently, the marginal reserve requirement equals 10 percent of a bank's demand and checking deposits.

Open market operations - Open market operations consists of the buying or selling of government securities. The Fed holds government securities, and so do individuals, banks, and other financial institutions such as brokerage companies and pension funds.

Paying interest and taxes on excess reserves - intended to eliminate effectively the implicit tax that reserve requirements used to impose on depository institutions.

2009 recession -

Credit default swap - A credit default swap is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting.

Mortgage Backed security - The mortgages are sold to a group of individuals that securitizes, or packages, the loans together into a security that investors can buy.

Cons - Some of these loans are a mix of really good buyers and risky buyers but are labeled as low risk buyers

Pros - People can make money off of it if people fail to pay their mortgages

Differing Philosophies

Keynes vs Hayek

Keynes Believed in using the monetary and fiscal policy

Hayek promoted the idea that private investment, rather than government spending

Paradox of Thrift - The paradox states that an increase in autonomous saving leads to a decrease in aggregate demand and thus a decrease in gross output which will in turn lower total saving

Fiscal and Monetary Policy (Sugar High) - When a monetary policy takes place the government boosts the economy by putting money into the economy. Increasing money flow will only create a temporary boost creating the "Sugar high"

Micro Economics - the part of economics concerned with single factors and the effects of individual decisions.

Marginal analysis - For each additional thing, what is the benefit/ satisfaction

Scarcity -the state of being scarce or in short supply; shortage.

Micro Economics - the part of economics concerned with single factors and the effects of individual decisions.

Opportunity Cost-The next best alternative that people give up when they make a choice

Diminishing Marginal utility- as the quantity of consumption goes up the satisfaction goes down

Production possibilities frontiers - a curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors.

Factors of production - Land (Somewhere to produce a good) Labor (Workers/Employees) Capital (Money to fund)

Practical Personal Financial Info

Gross Pay - Money you are paid before any taxes are deducted

Net pay - Amount paid after taxes are deducted

Federal tax -The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify. In essence, the marginal tax rate is the percentage taken from your next dollar of taxable income above a pre-defined income threshold.

State Taxes - Personal income tax. The Colorado income tax rate is a flat 4.63% of your federal taxable income, regardless of income level.

FICA Taxes - Taxes for medicare/ Medicaid and social security

FICO Score - Credit Score

Mandatory Deductions -The employer is required by federal and/or state law to deduct a certain amount of the employee's pay and send (remit) it to an institution or governmental agency for the purpose of satisfying the employee's debt, or contribution to the employee's retirement account, or tax withholding

Voluntary Deductions - Voluntary deductions are amounts which an employee has elected to have subtracted from gross pay. Examples are group life insurance, healthcare and/or other benefit deductions, Credit Union deductions,

Payday Loans- Easy loans you can get at a corner of the street. You get a loan and then pay them once you get your pay check. They are predatory because they charge high interest rates like 200% so once you get one your trapped and eventually end up hurting your credit score

Fixed rate mortgage - a mortgage that has a set interest that doesn't change no matter if the economy crashes